The Treasury Minister has lodged an amendement to this year’s Budget, adjusting the “distribution rules” which were published with the Budget documents on 17 October.

In the 2013 Draft Budget, Senator Philip Ozouf is proposing to introduce a set of new anti-avoidance rules which, following the repeal of the deemed distribution rules, seek to prevent Jersey residents from using Jersey resident companies to avoid Jersey income tax.

Immediately after releasing the draft law the Treasury held a series of meetings with tax advisers, taxpayers and representative bodies to discuss the application of the new rules. As a result, a number of changes to the distribution rules have been drafted and are now lodged ahead of the debate on 4 December.

The proposed changes are intended to:

• ensure the distribution rules do not discourage shareholders from making commercial loans to trading companies
• provide the option of a simplified basis of taxation for those taxpayers who do not want to complete the calculations required under the distribution rules
• make a number of minor amendments to ensure that the distribution rules operate as anticipated

Two of these changes (excluding commercial loans to trading companies from the definition of “distribution” and creating the option of a simplified basis of taxation) are proposed in response to specific requests made during the consultation excercise.

Senator Ozouf said “While we are determined to protect revenues, the Treasury has listened to feedback and we are proposing a number of additional measures to address the concerns raised.

“While we must ensure our tax revenue is protected from efforts to avoid or excessively defer tax, we would not want to prevent trading companies from obtaining commercial loans from their owners in order to expand or sustain their businesses.

“These changes will make it more straightforward for small trading companies to apply the distribution rules, without damaging the robustness of the rules as a whole.”